Target ACOS = Margin before PPC (Break-Even ACOS) - Target Margin after PPC
The ACoS metric and how it can be interepreted correctly is explained in more detail in this article (click here).
After substracting all costs, the margin for the product in this example (without costs for PPC) is at 20%.
It is therefore possible to to spend 20% of the revenue on ad spend without making losses.
Determining a Target ACOS thus depends on how much margin the product is targeting when PPC costs are included. In this example it was decided the margin should be at least 5%, so that the ACOS must not be higher than 15%. This is consequently the Target ACOS.
How high should my Target ACOS / Margin be?
Deciding on a target ACOS also means deciding on how much margin you want to have for each product sale.
That decision mainly depends on whether your primary goal is more in the direction of generating as many sales as possible (to let your company / brand grow more quickly or rank higher for keywords quicker), or whether your focus is more on running profitable ads.
If it's the first goal (maximizing sales), your Target ACOS should probably be about the same as your Break-Even ACOS.
Easy Calculation of Break Even ACOS in Profit Dashboard
Within Sellics' Profit overview, simply click on "select columns" at the top of the products table. In the category "Advertising", you can then activate the Break-Even ACoS column:
Make sure input your product costs first though.
Adding Target ACoS in 'Ad Groups' Tab
Within the Optimize tab of the Sellics PPC Manager, you can enter or upload your ad groups' target ACoS, which can then be used within your automation rules.
Still unsure about setting your target?
Learn more about setting the right goals for your campaigns in this recommended beginners' Amazon PPC course.